Can I Use ATM Receipts for Gambling Losses?

The gambling business in the United States is thriving. New casinos and sports betting shops are springing up all over the country. Las Vegas is booming, lotteries are popular, and internet gambling is bigger and better than ever before. 

If you love gambling, there are many options to place a wager. If that's your thing, we hope you come out on top. However, if you are fortunate enough to win money on a wise wager, remember that Uncle Sam also wants a part. 

Unless they obtain a Form W-2G, most taxpayers assume gambling winnings are tax-free. The truth is money won at a casino, racetrack, or elsewhere is taxable income that must be declared on your tax return. 

Gambling losses are not often deductible. However, the IRS permits you, the taxpayer, to deduct up to the amount of your gaming winnings. You must keep detailed records of your gaming losses. 

For example, receipts from an ATM machine at a casino, tickets, statements, or a journal. This does not count for all types of payment methods. This deduction is only accessible if your deductions are itemised. If you use the standard deduction, you cannot deduct your gambling losses from your taxes.

Keeping Track 

As a condition for deducting losses from profits, the IRS requires you to keep a journal of your winnings and losses. Your winnings comprise all of your wins during the year. To record your net profits or losses, you cannot often offset your winnings from one day with your losses from another. 

Typically, your profits and losses must be segregated and recorded separately. If you fulfil certain qualifications, the IRS will enable you to get your winnings and losses on the same day for the same type of gambling. 

This means that if you win one day and lose the next, you must report the gains as income on your tax return and deduct the losses separately as an itemised deduction. Lotteries, raffles, horse races, dog races, casino games, card games, and sports betting are all common sources of earnings and losses. 

Your records must contain the date and kind of gaming you participate in, the names and addresses of your gambling establishments, the persons with whom you gambled, and the sums you win and lose. 

Form 5754, Form W-2G, cancelled checks, credit card statements, and gambling establishment receipts are other types of evidence that may be used to verify your losses. You can also deduct the actual wagers' cost and any expenditures related to your gambling activity, such as transport to and from a casino, from your gambling losses. 

Remember that you cannot simply deduct your losses from your earnings and declare the difference on your tax return. Also, if you have a bad year, you cannot subtract your losses without reporting any profits. If the IRS permits this, it is effectively financing taxpayer gambling. 

Does Gambling Reduce Your Tax Bill?

Taxpayer-gamblers are typically unaware of how easily the IRS counters attempts to balance gambling gains with gambling losses. Gamblers are frequently unconcerned about the precise quantity of gambling gains they disclose because they feel they have enough gambling losses to offset their earnings. 

Losing money at a casino or racetrack does not lessen your tax burden on its own. Before claiming a loss deduction as an itemised deduction, you must first disclose all of your gains. As a result, deducting your losses only permits you to avoid paying taxes on your earnings.